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Negative Publicity: What Companies Need to Know About Public Reactions By David H. Henard c 'rises on the magnitude of the Exxon Valdez grounding or the Enron accounting scandal justifiably deserve our attention with respect to public response strategies. For most companies however, the likelihood of such crises is relatively low compared to the likelihood of being the target of a negative publicity campaign, defined as derogatory or defaming public information about a company. These campaigns are a standard publicity tool for both local and global issue-advocacy groups and their occurrence is predicted to rise in the coming years. Negative publicity in the business domain takes a variety of forms and can range in severity from a yearly press release listing of "dangerous" holiday toys to full-blown media campaigns such as the Center for Science in the Public Interest's (CSPI) targeting the rollout of Procter & Gamble's fat-free WOW™ snack chips or, more recently, the People for the Ethical Treatment of Animals' (Peta) campaigns against beef consumption at Burger King and McDonald's. While the consequences for a company are obviously not as dire as ones resulting from a major crisis, those resulting from a negative publicity campaign range from short-term inconvenience if handled well to long-term image and financial impairment if handled poorly. Negative pubiicity creates a dilemma for two key constituencies — the targeted company and the general public. The public must first decide how to interpret the negative information and then now to respond to it while companies must decide if and how to publicly respond to the publicity. While much has been written about the actions and reactions of spokespeople in the aftermath of crises, there has been relatively little investigation of how customers react to hearing negative information about a company. By improving our under- Negative publicity can range in severity from a yearly press release listing of "dangerous" holiday toys to full-blown media campaigns. David H. Henard 8 standing of how the public responds to negative publicity, companies will t>e better equipped to both prepare for and respond to it. This article addresses two key questions that are of interest to senior managers and company spokespeople: (1) is negative publicity an effective persuasion tool? and Public Relations Quarterly (2) what are the rules for company response to negative publicity? Is Negative Publicity Effective? For years, various people and organizations have used negative publicity in attempts to manipulate individual behavior Negative information has traditionally been broadcast in an effort to associate a targeted activity (e.g., smoking cigarettes) with negative consequences (e.g., lung cancer) with the goal that individuals will cease the activity out of either general anxiety or fear ofthe negative consequences associated with continuing the activity. Smoking cessation, reduction in sexually transmitted diseases and reduction in alcohol consumption are each the subject of past negative publicity campaigns. The use of negative publicity in the political arena also springs to mind. Whether it is a simple information leak or a well-planned campaign, politicians have become adept at negative publicity tactics. As noted, negative publicity campaigns are also increasingly finding their way into the business domain as issue-advocacy groups use negative information in attempts to sway public opinion. Is negative publicity an effective public persuasion tool? In a word, yes. Academic research from a variety of professional fields provides an insight as to why. One of the consistently robust research Negative information captures people's attention to a greater degree than positive information. findings is that individuals pay greater attention to negative, versus positive, information when evaluating messages. This phenomenon is known as the negativity bias. Simply stated, negative information captures people's attention to a greater degree than positive information. This is one reason that promotional teasers for the evening television newscast typically highlight a negative story. People are more likely to pay attention to the negative information and tune in later for the full story than if it had been a positive promo. One rationale for the existence of the negativity bias is that individuals are predisposed to receiving positive information. The vast majority of the information that people receive throughout the course of their daily lives is either positive or neutral in nature. Therefore, such information lacks diagnostic power and may not actively command the attention of inWinter 2002 dividuals. Negative information, on the other hand, is relatively unique and usually unexpected. This unexpectedness may account for the disproportionate weight that individuals afford negative information. Given this relative uniqueness of negative information, individuals may consider it to be more informative and diagnostic than the comparably more mundane positive or neutral information. In short, negative information grabs people's attention more effectively than positive information. As a publicity tool, negative information has two hooks that work in its favor. As noted above, the first is that individuals pay relatively closer attention to negative information than they do to positive information. The second hook is that negative information tends to linger longer in people's minds than positive information does. Long after negative information is presented to the public and even after individuals fail to recall specific facts about the original information, some negative bias remains. Ironically, even after a clear and undisputed refutation of negative information is made, individuals still have some residual negative bias toward the target of the original publicity. This is why negative publicity is so powerful. Even when the information is refuted, the general public will still retain some measure of lingering doubt regarding the target. This is one reason why negative political campaigns persist and why advocacy groups will continue to embrace negative publicity as a public relations tool. Motivation Matters The outlook for the targeted company, however, is not completely dismal. There is one considerable psychological factor that impacts how the public responds to negative pubiicity. Namely, the degree of negative publicity effectiveness depends upon the motivation level of each individual to actively evaluate the negative information. This motivation level is a key factor and stems primarily from the personal relevance that the targeted company has for an individual. Personal relevance is often noted for the crucial role that it plays in the general persuasion process. The essence of its impact is that relatively more motivated individuals (e.g., loyal or likely customers) focus on core aspects of the information presented while relatively less motivated individuals (e.g., occasional or non-customers) rely on simpler, often emotional, cues in interpreting information and developing a response to the negative publicity. For example, when Peta activists launched a graphic and global campaign against 400 McDonald's restaurants recently, loyal patrons were more likely to focus on the relevance of the animal welfare claims being made by Peta while less loyal McDonald's customers were more likely to focus on the "McCruelty's Unhappy Meals" featuring an ax-wielding Ronald, which were distributed by the activists. Non-customers are more apt than their relatively more motivated counterparts to be swayed by negative publicity. Conversely, loyal customers are less adversely impacted by negative publicity about a company. Loyal customers are prone to reject information that runs counter to their existing positive opinion of a company. Additionally, these individuals have a greater propensity to generate counterarguments toward the original negative publicity. Put simply, not only are loyal customers more likely to discount negative publicity but they are also more likely to formulate counterarguments to the information presented in the negative publicity. Continuing with the previous example, loyal McDonald's customers were much more likely to dismiss Peta's claims and even rationalize why the negative information was false or irrelevant in the first place. This is a powerful force in the targeted company's favor. Yet despite these favorable facts, companies must note that negative publicity still adversely impacts the behavior of even loyal consumers to some degree. Response Options A company that is the target of negative publicity has the opportunity to respond to the attack. In responding to negative publicity, an organization's spokespeople have the ability to shape the public's reaction to the negative publicity. Recall that individuals, via the negativity bias, tend to pay greater attention to negative information. This effect underscores the importance of a company's response to any negative publicity because the nature of that response can serve to either heighten or diminish the psychological impact of the original negative publicity. Generally speaking, spokespeople have two alternative strategies to exercise in crafting responses to negative publicity. They can either choose to respond or not to respond publicly to the negative information. If companies choose to respond, they may alternatively use either a direct or a qualified response. A direct response presents a claim that is supportive of the company. A qualified response, in addition to presenting the positive information, acknowledges some aspect of the negative publicity that is typically considered to be of minor importance to customers. In the negative publicity domain, a direct response may simply involve refuting the negative publicity without any acknowledgment of the validity of the original negative message. For exam10 ple, when Peta recently launched a national antimilk campaign, Dairy Council and other related officials openly dismissed Peta's claims and emphasized the numerous health benefits of milk consumption. A qualified company response, on the other hand, acknowledges some minor validity to the original negative information yet proceeds to advance an overall refutation of that negative We now know that the company's struggle for public opinion is more winnable than perhaps previously thought. message. Proctor & Gamble used a qualified response to refute the graphically vivid claims by CSPI that their WOV^"^ snack chips caused gastrointestinal distress among customers. When admitting that the problem existed among a rare number of individuals, P&G spokespeople went on to stress the healthy benefits of the new fat-free chips. Because a company's acknowledgement of some aspect of the negative publicity in a qualified response is atypical, it can lead some individuals to perceive the company's response as more honest and truthful. Given the existence of the negativity bias, the failure of a company to respond to or refute negative information might enhance the detrimental impact of the campaign among loyal customers by implicity reinforcing the original negative publicity. As such, "no comment" is generally not considered to be a viable company response. A "no comment" response simultaneously fails to refute the negative publicity or to forward a company position and should generally be avoided. Decisive action is almost always preferable to inaction when a firm is facing a crisis situation and substantial research reinforces the opinion that failure to publicly address negative publicity can lead to substantially lowered customer attitudes, on average. Figure 1 draws from current research on this issue and highlights the effect that the three company response options have across two broad customer types. From figure 1 it is evident that public reaction to negative publicity is heterogeneous and that the same company responses have different effects across different customer types. This provides us with our first glimpse of the important insight that the public neither reacts to negative publicity nor to company responses in lockstep. Public Relations Quarteiiy Figure 1. Company Response Effectiveness Across Customer Types Son or Occasional Customers No Comment response +10%' +8% +6% +4% +2% 0 -2% Qualified response Direct response -4% Post-Publidty Post-Response LAjyal or Llkety Customers +6% Direct response +4% +2% 0 19.4 Qualified response -2% B o -4% 5 -6% c -8% et No Comment response -10% Posi-Publicitv Post-Response Rules For Responding Negative publicity should not be interpreted as a universally damaging event. At the onset, the general public's opinion of the targeted company will undoubtedly be depressed to some degree given the knowledge that individuals pay greater attention to negative information than they do to positive information and that negative messages tend to linger in people's minds longer than positive messages. When negative publicity concerning a company first surfaces, the situation often appears to offer the attacked company little hope of public recovery. Yet, we now know that the company's struggle for public opinion is more winnable than perhaps previously thought. In fact, the upper hand in this battle may actually reside with the company under attack. Several rules or guidelines that prescribe actions to take in the event of a crisis already exist and have proved valuable to senior managers and company spokespeople. Taking the dynamics of public response into account, howWinter 2002 ever, presents us with three additional rules to consider. Response Rule #1: Understand the Dynamics ofthe Situation. It is important for company management to understand that customers do not respond to negative publicity in a uniform manner. While many senior managers may intuitively interpret negative publicity to be a universally detrimental event, emerging research indicates that the public interprets this information in at least two distinct ways. As noted in Figure 1, negative publicity adversely effects non- or occasional customers to a much greater degree than it does loyal or likely customers. After exposure to negative publicity, noncustomers, for example, expressed purchase intentions that were less than half that of loyal customers (8.8 V. 19.4 on a scale of 1-28). Therefore, even before the company response, loyal customers proved relatively less influenced by negative publicity. The upshot of these results for companies is that the greatest degree of damage from negative publicity will occur among the population that is least likely to purchase from the targeted company. While this dynamic is obviously no reason to celebrate, it does highlight the fact that public damage from negative publicity is less financially harmful than previously thought. While even loyal customers take notice of negative publicity, they tend to give companies the benefit of the doubt and will look to comments from spokespeople before changing their perceptions of the company. Understanding the dynamics of the situation allows companies to clearly gauge the situation from a fully informed vantage point and to formulate a public response that is strategically efficient. Response Rule #2: Always Respond to Negative Publicity. In keeping with the advice of countless others, companies should formally respond to negative publicity incidents. As is the case with public reactions to negative information, it is evident that individuals also react differently to various company responses. Referring to the results in Figure 1, loyal customers demonstrate a marked and significant rebound in purchase intentions after being exposed to either a direct or a qualified company response. A "no comment" reply, however, induces a significant decrease in purchase intentions, as illustrated. Ironically, non-customers' purchase intentions decrease following a company refutation. While a "no comment" reply actually elevates the intentions of occasional and non-customers, the magnitude of change is low and there is no strict statistical difference between purchase intentions after any of the three company response types. What these research results indicate are that company spokespeople must respond to negative publicity in order to shore up the perceptions and 11 purchase intentions of loyal and likely customers. The alternative is untenable. While none of the three company responses is likely to produce an appreciable attitude rebound among non- or occasional customers, the silver lining is that these are the individuals that are least likely to purchase from the company. Thus, the company's response strategy should be geared toward their most likely customers. Response Rule #3: Plan Ahead. Several authors advocate that companies should plan for crises in advance so that spokespeople can operate from a position of relative strength. There are two ways that companies can plan ahead. The traditional way is to assess your marketplace environment and formulate a response strategy in advance of any potential negative publicity event. This is a worthwhile venture. While there is no statistical distinction between the effectiveness of the direct and qualified response types, the direct response may be the generically best response option given the fact that it does not reinforce any portion of the original negative publicity and that it rebounds loyal customer attitudes equally as well as the qualified approach. A second way to plan ahead is to conduct activities that increase the number of individuals that are either loyal or Ukely users of your products. There is a wealth of research that attests to the fact that the motivation/personal relevance level of individuals is capable of being heightened or suppressed over time (i.e., it is not static). Therefore, image building activities such as advertising, promotions and public relations events serve to partially inoculate a company against future negative publicity by enhancing a company's relevance among the general public. The greater the general relevance of the company, the less susceptible the company is to negative publicity thus making the task of company response to negative publicity easier. In closing, while it is certainly wise for companies to prepare strategies for responding to corporate crises, it is iust as prudent for them to prepare for the more likely incidence of negative publicity. In order to develop the most efficient and effective response strategy to negative publicity, it is important to first understand the effects of negative publicity on the public. While many senior managers might assume that negative publicity about their company leads to widespread negative public perceptions, the reality of the situation is much different. It is true that negative information is damaging, in varying degrees, to a company. The key insight, however, is that the public responds to such publicity in distinctly different ways. No matter how a company responds to negative publicity, their least likely customers are apt to be adversely 12 swayed by the negative information. By contrast, more loyal customers are somewhat predisposed to resist the negative publicity and will look to a company's response for guidance before arriving at any final conclusions. Thus, senior managers and company spokespeople should understand that the battle for public perception in a negative publicity incident really centers on loyal and likely customers. PRQ David H. Henard, Ph.D. is an Assistant Professor of Marketing at North Carolina State University. 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